Oil falls as dollar rebounds from three-week trough

Economies.com
2018-12-10 21:15PM UTC

Oil futures tumbled on Monday as the dollar index scaled November 22 highs, following earlier data from China, the world's largest energy consumer, and the US. 

 

As of 08:37 GMT, US crude futures due in January fell 3.36% to $50.84 a barrel, while Brent February futures slumped 2.87% to $59.90 a barrel, as the dollar index rose 0.72% to 97.21, marking three-week highs. 

 

Earlier Chinese data showed the trade surplus ballooned to $44.7 billion in November from $34 billion as imports outstripped exports. 

 

Chinese consumer prices rose 2.2%, slowing down from 2.5% in October, while producer prices rose 2.7%, also slowing down from 3.3%. 

 

From the US, an index tracking job opportunities rose to 7.08 million from 6.96 million in September, missing estimates of 7.22 million.  

 

Payrolls data released last Friday showed the unemployment rate steadied at 3.7% in November as expected, the lowest since 1969. 

 

US average earnings rose 0.2% in November, missing estimates of 0.3% and matching the pace of October. 

 

The US economy added 155 thousand new jobs in November, missing estimates of 198K, and compared to October's 237K increase, revised from 250K. 

 

More importantly, OPEC announced an agreement to cut total output by 1.2 million bpd in coordination with allies such as Russia, with the cuts to start in January and with Iran, Libya, and Venezuela, gaining exceptions from the required cuts.

 

Russia's current output stands at about 11.37 million bpd, while recent reports indicate that Saudi Arabia's production increase by 0.5 million bpd last month to up to 11.3 million bpd, as US output steadied at record highs at 11.7 million bpd.

 

The concerns remain that OPEC might fail to contain the supply glut looming in the horizon despite the decision to cut output by 1.2 million bpd, as demand is expected to take a hit in major economies. 

 

Otherwise, Baker Hughes reported a drop of 10 rigs in the US oil rig count last week to a total of 887 rigs. 

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